Flurry of moves solidifies SMIC as a foundry to watch

Semiconductor Manufacturing International Corp. (SMIC) last week moved on several fronts to cement its position as a fast-rising Chinese wafer foundry-establishing a subsidiary in Japan, joining ARM Ltd.'s foundry program, and announcing a capacity expansion plan.

A spokeswoman for SMIC said the Shanghai foundry plans to manage and operate a 200mm-wafer fab slated for construction in Beijing. Though no target completion date was made available, the facility is expected to have a capacity of 30,000 wafers per month when fully operational.

The fab, which will operate as an independent entity, will rely on SMIC's ability to attract investment partners. The company declined to say whether it has opened discussions with anyone.

Sources indicated that SMIC might join with an element of Beijing-based Shougang Group, which is proposing to launch a semiconductor venture to be known as Huaxia Semiconductor Manufacturing Corp. However, the SMIC spokeswoman said the company has not held talks with Huaxia.

Also last week, SMIC said it has established a subsidiary in Japan to solicit foundry business from Japanese chipmakers. Toshiba Corp. and Fujitsu Ltd. already are major customers, and SMIC said a local presence should enable it to attract others. Toshiba holds a minority equity share in SMIC and provided much of the foundry's initial semiconductor manufacturing technology.

SMIC also said it is teaming with processor IP house ARM and will incorporate the U.K. design firm's RISC core into the foundry services it offers to fabless Chinese companies. SMIC said it will build a test chip using the ARM core, which it expects to validate later this year.

Meanwhile, SMIC said its Fab 1 facility has reached production levels of 15,000 wafers per month after a full year of operation, and is expected to move to 25,000 per month by the end of 2002. Fab 2 started initial production in September and is slated to achieve an output of 7,000 wafers per month by the end of the year.

The company is also ramping Fab 3, the first in China to use copper-interconnect processing, with an expected monthly output of 5,000 wafers by the end of the year.